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The GBP/USD pair gains momentum to around 1.3425 during the early Asian session on Wednesday. The Pound Sterling (GBP) edges higher against the Greenback on the upbeat UK preliminary S&P Global Purchasing Managers' Index (PMI) data. Traders will take more cues from the Fedspeak later on Wednesday. 

Data released by S&P Global on Tuesday showed that the UK Composite PMI came in at 52.1, versus estimates of 51.4 and the previous reading of 51.2. The Services and the Manufacturing PMI jumped to 52.1 and 51.2, respectively. Both figures came in above the market consensus. The improvement in the UK’s dominant services sector added to the positive tone and provided some support to the GBP against the US Dollar (USD). 

Nonetheless, expectations of a Bank of England (BoE) interest rate cut on Thursday might cap the upside for the Cable. Markets are widely anticipating the UK central bank to reduce its key bank rate by 25 basis points (bps) to 3.75% at its December meeting.  

"We continue to think the BoE will cut faster than markets currently price, with the Bank Rate declining to 3% by the end of 2026. The PMI data does not change that view," said Jefferies economist Modupe Adegbembo.

Federal Reserve (Fed) officials are split over whether more easing of monetary policy is needed next year. The median Fed official penciled in just one reduction in 2026, but some policymakers see no further cuts. Meanwhile, traders anticipate two rate cuts next year. Fed funds futures are pricing an implied 75.6% chance of a hold in rates at the US central bank's next meeting in January, up from nearly 70% a week ago, according to the CME FedWatch tool.

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